Few will remember that Paul Kazarian, the driving force behind the American private equity firm Japonica Partners, is the person who in June 2013 made an official public offer for Greek state bonds with a face value of up to 2.9 billion euros. He completed the trade without anyone learning its result. On Wall Street and in London, however, it is believed that he still holds a large portfolio of Greek debt.
So perhaps it is not so strange that the same investor is returning dynamically with a campaign in Greek and international news media, promoting the necessity for a “five-star” finance minister to be appointed in whichever new government is formed, as Japonica puts it in its advertisement. On Tuesday, he held an international conference call on the issue, arguing that it is “an imperative” that Greece appoint a finance minister “with international-caliber five-star specialist training and capabilities to build trust and credibility.”
He believes that this would be the most important reform in Greece and would be prepared to invest here if this were implemented. Most people would think that Kazarian, a former top executive at Goldman Sachs, wants to protect his investment. But things are much more complex in the case of the 59-year-old banker. Kazarian has spent much time and money in the past two-and-a-half years internationally promoting the idea that Greece should adopt International Public Sector Accounting Standards (IPSAS), on the basis of which he claims that the net Greek public debt is just 18 percent of GDP, and he quotes the finding of a large independent company to back this. Kazarian has repeatedly noted that the method by which Greece’s debt is calculated in the eurozone is determined by the Maastricht Treaty and can change only with a unanimous decision by the European Council.
Greece’s problem, he says, is that the reflection of its debt in the eurozone, as well as in other international economies, does not follow company accounting standards but other – frequently conflicting – legal regulations and directions from organizations such as the Organization for Economic Cooperation and Development, the International Monetary Fund or the World Bank, which hide each country’s real net position. And Kazarian wants to project Greece’s hidden advantage, its low net debt, which obviously arises from a review of its assets.
To this end, he has held a series of presentations in Greece and abroad in recent years. One that stands out is his participation in a major conference in Munich on July 8-9, on the subject “Re-examining Public Debt,” as the dramatic negotiations between Athens and its creditors were reaching a climax. Kazarian had made sure that among those present would be Hans-Werner Sinn of the Ifo Institute, Clemens Fuest from ZEW, Carlos Cottarelli from the IMF, senior executives from Ernst & Young, Deloitte and KPMG, officials from Germany’s Finance Ministry, as well as journalists Wolfgang Munchau from the Financial Times and Simon Nixon of the Wall Street Journal.
An unknown decision by the Tsipras government is also worth noting. On June 2, on the basis of a decision by Alternate Finance Minister Dimitris Mardas, a working group was set up to facilitate the construction of a new framework to follow public accounting, specifically on the basis of IPSAS.
Paul B. Kazarian, a former investment banker at Goldman Sachs, with his trademark round, horn-rimmed glasses, is the son of Armenian immigrants who succeeded on Wall Street. He maintains close contact with many of his former colleagues as well as with important investment groups. Major deals of his have also appeared on front pages in America’s financial press. His modus operandi is to take a position in distressed companies and gradually make them profitable before selling. He has taken part in the restructuring of big groups such as Allegheny International and Sunbeam-Oster or as a “white knight” in buyouts, with the best-known being an offer of 1.6 billion dollars for Chicago North Western.